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Business Travel Expenses

Can be as simple as a train ride to a nearby city or as baffling as cashing a traveler's check in Gabon.

Travel expenses, transportation expenses, vehicle expenses – aren’t they all more or less the same thing? Well, maybe to you they are, but not to the IRS. There are subtle and there are grand differences. Understanding standard business travel and the expenses related to a typical business trip is the place to start.

Over the river and through the woods to Grandmother’s house goes Pat Personal Trainer. Gram just bought a color laser printer and it’s the cheapest way for Pat to print the few brochures that he needs. He leaves Friday afternoon. The bus gets him there in time for dinner. He works at the computer all the next day until the wee hours. (He’s eager to test this new brochure at the networking luncheon he’s going to on Wednesday.)

Very early the next morning he kisses Grandma good-bye and heads back home on the bus. Pat was away from his home, for business, overnight. It was business travel. Therefore he may deduct travel expenses.

The IRS says this about business travel …
If you temporarily travel away from your tax home for business you may deduct ordinary and necessary travel expenses. You may not write off “lavish or extravagant” expenses.

The IRS has written thousands of words on business travel. Here are the most important: Your trip is business travel if your business duties require you to be away from the general area of your tax home longer than an ordinary day’s work, so that you need to get some sleep or rest.

Think of your tax home as your main or regular place of business. It doesn’t matter where you maintain your family home.

And, if you stay overnight that covers needing to get some rest. But, be careful: don’t go around telling people that you ordinarily work 20 hours a day or you’ll miss out on deducting your business trips!

Business Travel, Simply Stated
If you are away from your place of business, overnight, for a purpose that benefits your business then you have been on a business trip and your costs are deductible travel expenses.

What! You’re an itinerant jester, who doesn’t have a regular or main place of business? Sorry, no travel expenses allowed.

Travis Truck Driver leaves the terminal at five in the morning. Three hundred miles later he’s at the turnaround. While his truck is being unloaded he has a big lunch and then dozes off outside the diner while waiting for the guys to finish the reloading. He then heads back to the terminal where the truck is again unloaded. He’s home by midnight. Travis’ lunch break nap was just that, “a nap.” It was not enough time to get adequate sleep. His trip is not considered travel. Therefore he cannot deduct travel expenses.

A trip classified as business travel will get you a lot more deductions than will one classified as business transportation.

Transportation expenses are solely the costs of getting from one business event location to another.

Albuquerque is about 70 miles from my office in Santa Fe. If I drive to Albuquerque in the morning to meet with a client, have lunch alone at a restaurant, then drive to a second meeting, then drive back to Santa Fe, my only deductible costs are my auto mileage there and back and parking.

Here’s a different scenario. In the morning I meet with a client in Albuquerque, have lunch alone, and since my other client is not available to meet with me until 8 PM I do some shopping, have dinner with a friend at a restaurant, and then meet with the second client. The meeting runs much later than expected and I’m too tired to drive back to Santa Fe. I stay in an Albuquerque hotel and drive back to my home office in the morning. Because I was there substantially longer than an ordinary day’s work I can deduct my travel expenses that include my drive to, from and around Albuquerque, my lunch and my dinner (not my friend’s dinner) and the cost of the hotel.

Business Travel Expenses Are The Costs Of The Trip.
Business travel expenses can get tangled up in IRS jargon, so for easier understanding, think of them as falling into the following groups:

1. Transport costs

2. Lodging

3. Other travel-necessitated expenses

4. Incidentals

5. Your own meals

6. Meals & Entertainment for business associates

Let’s look at a few examples of the kinds of expenses that fit each group.

1.Transport

Includes the costs of transporting you and your stuff, by any means, to, from and while at, your destination.

5. Meals For Yourself While You’re Away
When you are traveling for business you may deduct the costs for all of your own meals — breakfast, lunch, dinner, snacks.

If you prefer, rather than saving receipts for all food while traveling, you may use the IRS per diem amount for “meals and incidentals.” See the IRS chart here. There is an explanation of how to use this chart in my book, The Confident Indie.

6. Meals & Entertainment For Business Associates
Meals and entertainment for business associates are deducted using the same rules whether you and your business associate are dining in London or next door to your home office.

If you are certain that your trip is entirely for a business purpose, then you may deduct all your travel expenses. It can be as simple as that. Or as baffling as cashing a traveler’s check in Gabon. Some of the complications are:

taking another person with you on the trip

a trip outside the continental United States

a trip both within the USA and outside the USA

a trip both within the USA and outside the USA

If any of the above complications applies to you be sure to check out the travel expenses chapter in The Confident Indie.

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